The global economy is expected to expand 4 percent in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year - Photo: Special

JAKARTA (TheInsiderStories) –  The global economy is expected to expand 4 percent in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year, said the World Bank in the latest report. A recovery, however, will likely be subdued, unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms.

Although the global economy is growing again after a 4.3 percent contraction in 2020, the pandemic has caused a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period. Top near-term policy priorities are controlling the spread of COVID-19 and ensuring rapid and widespread vaccine deployment.

To support economic recovery, authorities also need to facilitate a re-investment cycle aimed at sustainable growth that is less dependent on government debt.

“While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges in public health, debt management, budget policies, central banking and structural reforms, as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth,” said World Bank Group President David Malpass in an official statement.

He added, “To overcome the impacts of the pandemic and counter the investment headwind, there needs to be a major push to improve business environments, increase labor and product market flexibility, and strengthen transparency and governance.”

To support the global economic recovery, the Fund has prepared to deploy fast track support up to US$160 billion until 2021, to help the countries fight the COVID-19. While, its financial armed, the International Finance Corporation’ COVID-19 response pipeline to date includes more than 300 companies for a total of $8.9 billion.

Last year, Malpass has launched the Multilateral Investment Guarantee Agency (MIGA) worth of $6.5 billion facility to support private sector investors and lenders in tackling the virus spread. The facility redirects MIGA’ capacity toward the purchase of urgent medical equipment, providing working capital for small and medium enterprises, and supporting short-term funding needs of governments.

He also revealed, that the agency have been working to provide debt relief for poor countries based on the World Bank – International Monetary Fund (IMF) Joint Call to Action for Debt Relief for IDA countries. The implementation was discussed twice this week in meetings at the G20 International Financial Architecture Working Group, he noted.

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